Last Updated: 31st March 2020
Yesterday I did a personality analysis on someone trying to set up a new business (self-employment). While business consulting is out of my league, here’s a checklist to see if you’re ready to be self-employed.
Are you eligible?
Do you really think you can do it? The long hours, the constant struggle of keeping your head above water, less contact with friends and family, honing yourself regularly to be the best in the game? Think about it. Be realistic. Ask a loved one for their views.
If you’re ready to be self-employed, do you know your line of business? Do you have the skillset? Or would you hire others and manage the skilled labour? Again, think about it.
Dig Into Your Finances
When you’re self-employed, you have to pay for your own sick leaves, prepare a pension fund on your own money (that could be used into the business otherwise), and if you’re hiring someone, you have to pay salary as well as medical coverages and vacation days to your employees. And worse comes to worst, if you fall sick or somehow business never works, do you have enough for yourself and your family to fall back on?
Dig into your finances to plan and prepare the above and more. You have to record every little financial detail and keep your books up to date, whether it’s under your name or the company name.
Also read: Are You Financially SMART?
Talk To The Taxman
Your accountant is the best person to talk to at this stage. Understand what taxes you have to pay in your line of business, what tax breaks you might get, and what claims you can file.
Your tax guy can also tell you what monetary risks you can take to launch your business, or maybe find some investors (or partners) for you. Just talk it out to the barest detail.
And lastly, consider the VAT in your line of work – would you have to pay VAT at all? Women in India have different tax benefits almost every year, so be sure to be aware of these details.
Think About Insurance
Learn the policies associated with your line of work. What kind of insurances you need to take – mandatory and optional? If you’re taking a loan from the bank, most banks insist on signing you up with their dedicated line of life insurance policies. Is that enough, or do you need to take health insurance? Owners’ insurance? Equipment insurance? Inventory insurance? or simply raw materials’ insurance?
Define your line of work to understand the different policies you need to get into place before you go to a government office for licenses.
Bring In The Troops
If you’re ready to be self-employed, spare no one at home. Bring in the troops to help you out. Maybe your wife can get into the financial nitty-gritty, while your kids can be your office assistants. Your father can work things out with the taxman while your mother can help you with the planning.
Bring in a friend to test your products or services. Get someone else’s views on what you have to offer. Again, spare no one. Let every willing body be at your service when you know you’re ready to be self-employed.
To Train Or Not
Once you’re sure about yourself, plan your business. Think if you need any special training to get started, or simply to do a better job at what you’re already doing? Maybe 1 Microsoft webinar training on Excel can move you forward in leaps and bounds on how to create and maintain your balance sheet.
If you have any employees, think if training them could be fruitful for your business. A few bucks well spent can rake in the moolah more quickly, just keep that in mind.
Know The Laws
Understand the laws related to your chosen line of business and the industry you’re in. Find the laws related to the taxes you will file. Research the laws related to the premises you choose to conduct your business. Learn them. Note them down. Memorise them. Be friendly with the law, or else there will be unnecessary situations in your life.
Over to you..
These are a few of my thoughts, think of it as an exercise to see if you are ready to be self-employed. Again, this is not a comprehensive list to start a new business. This is something I put together based on my experience of starting a new business in India. And running it successfully (more or less!)
Read our posts for Women Entrepreneurs for success in business.
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